AMD accuses former top employees of stealing over 100,000 documents

Chip maker says the defendants gave trade secrets to their new employer, Nvidia.

AMD filed a complaint yesterday alleging that four of its former employees—one former vice-president and three former managers—transferred sensitive AMD documents before joining competing graphics chip maker Nvidia and then violated a “no-solicitation of employees” promise. The company alleges that Robert Feldstein, Manoo Desai, and Nicolas Kociuk collectively downloaded over 100,000 files onto external hard drives in the six months before leaving the company. All three and another manager, Richard Hagen, were accused of recruiting AMD employees after leaving for Nvidia.

The most senior person accused in AMD's complaint is Robert Feldstein, who was the vice president of strategic development at AMD until his departure for AMD's competitor. ZDnet notes that Feldstein "helped broker major contracts to see AMD technology launch in the next-generation range of games consoles, including the Xbox, PlayStation, and the Wii U, before he left for Nvidia.” In the complaint, AMD says that after Feldstein and Hagen left, they recruited Desai, who then recruited Kociuk “and perhaps additional AMD employees to leave AMD for competitor Nvidia.”

AMD says it forensically analyzed the former employees' computers and found additional evidence that “Desai and Kociuk conspired with each other to misappropriate AMD's confidential, proprietary, and/or trade secret information; and/or to intentionally access AMD's protected computers, without authorization and/or in a way that exceeded their authorized access.”

The chip maker asked for injunctive relief from the court in its complaint, hoping to recover the files which it says it has forensic evidence of the four defendants taking. It also filed a restraining order against the four employees, which was granted. The order requires Feldstein, Desai, and Kociuk to retain all of their AMD property and preserve all computers in their ownership for forensic evaluation. Mr. Hagen was only ordered to refrain from recruiting any more AMD employees.

Promoted Comments

Then again, how can you be subject to terms of an employer you don't work for anymore? If you aren't on their payroll, I don't see how they or anyone else can do anything to you.

They can't dock your pay but they certainly can try to sue you for violation of contractual obligations or some such nonsense. Companies makes you sign a bunch of papers with a ton of fine print when you start with them and there's probably stuff in there about it.

Key word is "try" though - as others have mentioned, CA has basically outlawed that and it's difficult to actually enforce unless there's special circumstances.

Looking at their filing, unless they made it all up, I'm pretty sure they're going to succeed. First off, the case is in Massachusetts, not California. Not that it probably really matters though. None of the claims involved a non-compete clause. Again, this is about former employees recruiting current employees, when they signed an agreement not to, and the theft of intellectual property owned by AMD. This is a breach of contract and trade secrets case.

As for how they could go after these people? Simple. Although they don't spell out the damages in the complaint, they could sue the former employees for the value of the employees that they recruited in violation of their agreement, and for the worth of the trade secrets they took from the company. I have no idea how much this could be, but I'm guessing it's between "a lot" and "a shit ton" of money. So yeah, these idiots could be on the hook for hundreds of thousands if not millions of dollars back to AMD.

And when I say idiots, I really mean idiots. You'd think that being in the computer industry, these people might be a bit more computer savvy. But according to the complaint, the defendants were recorded as hooking up external drives to their work computers and transferring thousands of confidential files to those drives just days before leaving the company. One of them even googled how to transfer large numbers of files. Suffice to say, these people are not leet hackers, and paid little to no attention to hiding their tracks, despite almost certainly knowing that what they were doing could get them into huge amounts of trouble. Absolute idiots.

I guess AMD is finally starting to notice the brain drain they've been suffering since Rory Reed took over. And rather than... stop it. They decided to use the court system to try and make it look... far worse than it probably is.

Really smart, AMD. No wonder you're on top of the market ri-- oh, wait a tick.

For graphics they compete well with NVIDA. CPU vs Intel, not so much. And they locked in contracts for future gen consoles which is a pretty good deal.

Is recruiting from a rival company illegal? If not, then why are AMD filing a complaint about it?

<IANAL>

Not necessarily, but if the employees were subject to a contract with a no-compete clause (which it sounds like they may be) then they are in breach-of-contract and AMD may be entitled to relief according to the contract terms.

</IANAL>

Why are they filing a complaint? From the sound of it, these former employees are totally in the wrong. You can't just take off with the company's data when you leave!

Most non-compete agreements are nigh unenforceable (Especially in California, as Sufinsil noted), which is a large part of why cases like this are pretty rare. It looks like there might be elements to this that change that calculus, though. The people in question were a VP and 3 (presumably high-placed) managers. Thus, they potentially had more and longer-range proprietary knowledge than a typical line employee. Nvidia may have been specifically identified as a particular forbidden competitor, as opposed to one member of a generic set of "semiconductor design firms" or the like. Finally, if AMD is trying to enforce their non-compete, that probably means there was also a time-limited term and some form of compensation tied specifically to that agreement. With all of those factors in play, AMD might be able to make that part of their case. The misappropriation of trade secrets will be a totally separate matter, and much easier to punish if it's found to have happened.

Is recruiting from a rival company illegal? If not, then why are AMD filing a complaint about it?

As others have said already, probably not. But they did apparently sign agreements saying that they wouldn't recruit other employees to join them, which is apparently exactly what they did. I don't think any state blocks that kind of agreement.

And, of course, there's also the not so insignificant part about them apparently taking a whole bunch of documents with them to use at NVIDIA. Now THAT is certainly illegal, and if true, those former employees deserve to get taken behind the woodshed. It's amazing that they'd be that stupid.

Is recruiting from a rival company illegal? If not, then why are AMD filing a complaint about it?

<IANAL>

Not necessarily, but if the employees were subject to a contract with a no-compete clause (which it sounds like they may be) then they are in breach-of-contract and AMD may be entitled to relief according to the contract terms.

</IANAL>

Why are they filing a complaint? From the sound of it, these former employees are totally in the wrong. You can't just take off with the company's data when you leave!

Ah, I somehow missed the part about a non-compete clause. Thanks!

Then again, how can you be subject to terms of an employer you don't work for anymore? If you aren't on their payroll, I don't see how they or anyone else can do anything to you.

I presume that some part of the severence package may not be paid out immediately but either paid out over the course of the non-compete/recruiting period or at the end of the non-compete/recruiting period. It's the only way I can think of that they would have any leverage over former employees.

Then again, how can you be subject to terms of an employer you don't work for anymore? If you aren't on their payroll, I don't see how they or anyone else can do anything to you.

They can't dock your pay but they certainly can try to sue you for violation of contractual obligations or some such nonsense. Companies makes you sign a bunch of papers with a ton of fine print when you start with them and there's probably stuff in there about it.

Key word is "try" though - as others have mentioned, CA has basically outlawed that and it's difficult to actually enforce unless there's special circumstances.

I corrected the story with a better quote that doesn't rely so much on rumor

It still pretty much confirms all the rumors that both Microsoft and Sony will be using AMD tech for their next-gen systems though; the old rumors also stated the WiiU was using AMD and that proved correct as well.

Regarding the other aspect of the story, I can't help but feel sorry for AMD ...but then again would they not do, or in most likelihood done the same to NVIDIA? It's really just about don't get caught, as all these types of corporate espionage and employee poaching is standard issue.

Then again, how can you be subject to terms of an employer you don't work for anymore? If you aren't on their payroll, I don't see how they or anyone else can do anything to you.

They can't dock your pay but they certainly can try to sue you for violation of contractual obligations or some such nonsense. Companies makes you sign a bunch of papers with a ton of fine print when you start with them and there's probably stuff in there about it.

Key word is "try" though - as others have mentioned, CA has basically outlawed that and it's difficult to actually enforce unless there's special circumstances.

Looking at their filing, unless they made it all up, I'm pretty sure they're going to succeed. First off, the case is in Massachusetts, not California. Not that it probably really matters though. None of the claims involved a non-compete clause. Again, this is about former employees recruiting current employees, when they signed an agreement not to, and the theft of intellectual property owned by AMD. This is a breach of contract and trade secrets case.

As for how they could go after these people? Simple. Although they don't spell out the damages in the complaint, they could sue the former employees for the value of the employees that they recruited in violation of their agreement, and for the worth of the trade secrets they took from the company. I have no idea how much this could be, but I'm guessing it's between "a lot" and "a shit ton" of money. So yeah, these idiots could be on the hook for hundreds of thousands if not millions of dollars back to AMD.

And when I say idiots, I really mean idiots. You'd think that being in the computer industry, these people might be a bit more computer savvy. But according to the complaint, the defendants were recorded as hooking up external drives to their work computers and transferring thousands of confidential files to those drives just days before leaving the company. One of them even googled how to transfer large numbers of files. Suffice to say, these people are not leet hackers, and paid little to no attention to hiding their tracks, despite almost certainly knowing that what they were doing could get them into huge amounts of trouble. Absolute idiots.

Maybe I'm just not thinking it through enough, but... I've always found it odd how much power companies have in controlling where former employees can work and who can recruit or be recruited.

There was a lawsuit in Australia several years ago that determined some contracts were a restraint of trade. It was to do with where a contract agency arranged a job, and then said to the employee "If you work for that employer at any time in the next 12 [+/-] months it has to be through us".

Of course, there is a bit of a difference between not being able to recruit an individual and them stealing secrets. I'm also curious how you "return" an electronic record and prove that it hasn't been copied.

Edit: From reading other comments, it appears that non-compete clauses (which are a similar kind of anti-competitive behaviour) don't go down too well in the US either.

As I've seen at work more than once, the threat of non-competes is often enough. I don't know that it comes into play when we're talking of companies of this size (shrunken though AMD may be these days), but it's a factor with smaller companies, at least.

I best recall a new salesperson having been hired. We phone jockeys were told that if anyone called asking about said new employee to lie and say she was in a different department (which apparently would not have been a violation of her non-compete.) I was also directly told by the head of the company that the agreement they made with this person was that if they received so much as a phone call from a lawyer, she was out the door.

Even though a non-compete will likely get tossed, a company has to weigh the potential value of that employee versus how much it's going to cost to fight it out until it gets tossed in court, if it gets to that.

On the other hand, if you're dumbass enough to not know how to perform a bit of industrial espionage, you get what's coming to you. Also, this shines poorly on NVidia - it's one thing to get slipped this and that under a restaurant table for a price. It's another to possibly actively recruit high-up employees, get them to steal massive loads of competitive intelligence, and you're going to put these felonious sorts on payroll? Not cool, man.

Wow, these people have no sense of honor. They are recruited for their skills not what they have as infomation/data. Any violation of intellectual property will be exposed later in products if they propagate such behaviour. Engineers must have a strong sense of intellectual property as they live and breath those. It is ok to go to a competitor but to steal/access to proprietary data of their old employer is just wrong. They ought to have the mindset that they can develop a next-gen solution that is clean of IP rights of existing tech. It is not hard, are these people just stupid/greedy or in a hurry to please their new employers. In fact, they can get fired if their new manager is a principled guy/lady!.Yeah AMD, give them the full force of the law!.

True. As more of their resources being to leave the company, the security had to be more vigilant hence be able to catch wrong doers in the process of exit. Here they caught four. Bravo for their internal security.

These comments are pretty appalling. Exactly how many of you who have condemned and slandered these people have a shred of knowledge about the situation or acquaintance with Bob, Manoo, Rick, and Nick? The answer is zero. For the most part you are no better than a lynching mob hiding behind anonymity via the internet. If you are US citizens you should at least be familiar with the presumption of innocence and show these people the same consideration and respect you would want under similar circumstances.

I happen to have worked with pretty closely with Bob over the years, with Manoo from time-to-time, and Rick occasionally. I've never seen any behavior that would give substance to these accusations. If it is shown than any or all of them are innocent of these complaints filed in a civil lawsuit, what redress do they have for having their reputations smeared by a multi-billion dollar company? This will stick with them forever regardless of the outcome.

AMD is losing a lot of the best people. That has to be laid at the feet of its current leadership, which includes the Board of Directors and the Chairman Bruce Claflin, not just Rory Read. To try and stem that tide through fear, whether it has some foundation in fact or not, reminds me of Princess Leia in the original Star Wars, "The more you tighten your grip Tarkin, the more star systems will slip through your fingers." Positive leadership attracts people. Repelling people, the best people, is commentary enough on AMD's leadership.

Someone said, "these people have no sense of honor". That has yet to be proven, doesn't it? What is proven is that many of the commenters in this thread have no sense of honor or propriety.

If you are going to attack someone, at least be "man enough" to give your name, instead of cowering behind your handle/posting name.

Maybe I'm just not thinking it through enough, but... I've always found it odd how much power companies have in controlling where former employees can work and who can recruit or be recruited.

Employees sign non-competes of their own free will (theoretically) so it's not really their former employer controlling where they can work after they leave, it's their prior-selves. Of course in some states you can't even voluntarily give up your right to choose a new employer after you leave an old one.

But at any rate it's probably always illegal to take sensitive technical documents of your former employer with you when you jump ship to a direct competitor.

These comments are pretty appalling. Exactly how many of you who have condemned and slandered these people have a shred of knowledge about the situation or acquaintance with Bob, Manoo, Rick, and Nick? The answer is zero. For the most part you are no better than a lynching mob hiding behind anonymity via the internet. If you are US citizens you should at least be familiar with the presumption of innocence and show these people the same consideration and respect you would want under similar circumstances.

I happen to have worked with pretty closely with Bob over the years, with Manoo from time-to-time, and Rick occasionally. I've never seen any behavior that would give substance to these accusations. If it is shown than any or all of them are innocent of these complaints filed in a civil lawsuit, what redress do they have for having their reputations smeared by a multi-billion dollar company? This will stick with them forever regardless of the outcome.

AMD is losing a lot of the best people. That has to be laid at the feet of its current leadership, which includes the Board of Directors and the Chairman Bruce Claflin, not just Rory Read. To try and stem that tide through fear, whether it has some foundation in fact or not, reminds me of Princess Leia in the original Star Wars, "The more you tighten your grip Tarkin, the more star systems will slip through your fingers." Positive leadership attracts people. Repelling people, the best people, is commentary enough on AMD's leadership.

Someone said, "these people have no sense of honor". That has yet to be proven, doesn't it? What is proven is that many of the commenters in this thread have no sense of honor or propriety.

If you are going to attack someone, at least be "man enough" to give your name, instead of cowering behind your handle/posting name.

Then again, how can you be subject to terms of an employer you don't work for anymore? If you aren't on their payroll, I don't see how they or anyone else can do anything to you.

They can't dock your pay but they certainly can try to sue you for violation of contractual obligations or some such nonsense. Companies makes you sign a bunch of papers with a ton of fine print when you start with them and there's probably stuff in there about it.

Key word is "try" though - as others have mentioned, CA has basically outlawed that and it's difficult to actually enforce unless there's special circumstances.

Looking at their filing, unless they made it all up, I'm pretty sure they're going to succeed. First off, the case is in Massachusetts, not California. Not that it probably really matters though. None of the claims involved a non-compete clause. Again, this is about former employees recruiting current employees, when they signed an agreement not to, and the theft of intellectual property owned by AMD. This is a breach of contract and trade secrets case.

As for how they could go after these people? Simple. Although they don't spell out the damages in the complaint, they could sue the former employees for the value of the employees that they recruited in violation of their agreement, and for the worth of the trade secrets they took from the company. I have no idea how much this could be, but I'm guessing it's between "a lot" and "a shit ton" of money. So yeah, these idiots could be on the hook for hundreds of thousands if not millions of dollars back to AMD.

And when I say idiots, I really mean idiots. You'd think that being in the computer industry, these people might be a bit more computer savvy. But according to the complaint, the defendants were recorded as hooking up external drives to their work computers and transferring thousands of confidential files to those drives just days before leaving the company. One of them even googled how to transfer large numbers of files. Suffice to say, these people are not leet hackers, and paid little to no attention to hiding their tracks, despite almost certainly knowing that what they were doing could get them into huge amounts of trouble. Absolute idiots.

We had an incident similar to this where I work, a member of our sales team apparently took ad rate info from their former employer a competitor of ours, and was using it to compete in ad sales against them. This person however was also a moron and told several people including clients she had the info, and of course that got to the competitor who then contacted us about it. 3 hours later she was no longer employed, and no one in this town was going to hire her again. Some people are just plain stupid. They could have sued her and won, but they decided firing her was enough.

Although it goes against my gut, I can accept that for higher level managers and executives, because they are in a position to take swaths of sensitive and strategic information and people if they leave a company (just as these 4 are accused of doing), a limited (like, 1 year) non-compete / no-solicitation clause in a contract is fair. If you're going to get paid the big bucks in the present, then you may have to give up other options in the future; it's the whole opportunity cost deal.

I don't think this should apply as strictly to the guys in the trenches, who are doing the actual creation of product and innovation.